UK Supreme Court considers test for dishonesty in criminal cases

The Supreme Court of England and Wales in its recent decision in Ivey v Genting Casinos [2017] UKSC 67 (“Ivey“) took the opportunity to reassess the approach in criminal cases to determining whether a defendant has acted dishonestly. The Supreme Court held that the “Ghosh test”, which excused a defendant who did not know that ordinary and honest people would regard his behaviour as dishonest, should no longer be used. Instead the Court held that the test for dishonesty in criminal cases should be brought in line with the test already used in civil cases. We consider the decision further below.

Background

Mr Ivey, a professional gambler, brought a debt claim against a casino to recover £7.7 million that he had won in a card game. The casino refused to pay his winnings when it discovered that he had used a technique known as “edge sorting”. The casino argued that “edge sorting” constituted cheating under s.42 of the Gambling Act 2005 (a criminal offence) and that it was an implied term of Mr Ivey’s contract with the casino that he would not be paid his winnings if he gained them by committing the offence of cheating.

Mr Ivey admitted to “edge sorting” and the High Court accepted that he genuinely believed he had not cheated. However, Mr Ivey’s claim failed at first instance and in the Court of Appeal on the basis that “edge sorting” nevertheless constituted cheating as a matter of law. Mr Ivey appealed to the Supreme Court, arguing that he could not be guilty of cheating unless he was found to have acted dishonestly. He argued that as he had not considered that there was anything wrong with what he was doing, he could not have been dishonest.

The Supreme Court’s decision in Ivey

The Supreme Court dismissed Mr Ivey’s appeal, finding that “edge sorting” was cheating. It also held that the offence of cheating did not require Mr Ivey to have acted dishonestly.

However the Supreme Court undertook a detailed consideration of the test for dishonesty in criminal cases. Until Ivey, “dishonesty” had been interpreted differently in criminal and civil cases in England and Wales. Dishonesty in criminal cases was assessed by reference to a two-stage test (known as the “Ghosh test”):

Was the defendant’s behaviour dishonest by the standards of reasonable and honest people? (an objective standard); and

Did the defendant realise that ordinary honest people would have viewed his behaviour as dishonest? (a subjective standard).

If the answer to either of these questions was no, the test was not satisfied. This had the result that a defendant who did not understand ordinary standards of honesty should be acquitted. For example, if a defendant genuinely believed it was acceptable to steal from a house whose front door had been left open, and it did not occur to him that others might disagree, he was not guilty of theft.

The Supreme Court decided that the Ghosh test should no longer be used, and that the “objective” standard for dishonesty used in civil cases should also be applied in criminal matters. The Court said that the civil test was that set out in Royal Brunei Airways v Tan [1995] 2 AC 378 and Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37.

The civil test for dishonesty first considers the state of a defendant’s (subjective) knowledge and belief as to the facts. The Court then assesses whether, given the state of his knowledge or belief, the defendant’s conduct was dishonest by the standards of ordinary honest people (an objective test). The importance of the requirement to consider the defendant’s subjective knowledge of the situation was illustrated in a hypothetical example considered by the Supreme Court.

The Supreme Court considered the example of someone who comes from a country where public transport is free and on his first day in England travels on a bus without paying. In this example the bus passenger would not be found to have acted dishonestly, because in the context of his actual state of mind (a misconception that bus travel is free) his conduct is not objectively dishonest. It is not an excuse in a civil case for a defendant to say that he did not realise most people would have seen what he did as dishonest.

Comment

Although this change affects only the criminal test, it does mean that if a party is alleged to have been dishonest in civil proceedings, there may well be a risk that a criminal charge could also arise. In some (admittedly limited) circumstances before Ivey, a defendant could have been liable in a civil claim for dishonesty, but not liable to conviction of a criminal offence by the second limb of the Ghosh test. This distinction is now unlikely to be drawn in criminal cases heard in England and Wales.

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